The government has created a new minister for cities whose role will be to consider the impact of policy on England's largest urban areas.

Greg Clark, minister for decentralisation, will take on the role alongside his current duties and will join a ministerial group chaired by deputy prime minister Nick Clegg. The group will focus its work on eight "core cities": Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield. The role will see Clark working jointly in the departments of commuities and local government, and business, innovation and skils.

Clark is understood to have impressed the Conservative party leadership with his performance as minister for decentralisation. Speaking on his appointment, he said: "Our cities generate well over half of our wealth and are home to the majority of our businesses and our leading universities. If our cities do well, the country does well. I am looking forward to working with the leaders of Britain's cities to ensure that the government does everything possible to help urban Britain thrive".

Lord Shipley, former leader of Newcastle city council, was appointed adviser to the minister. Nick Forbes, current leader of Newcastle, said he intended to work closely with the government encourage investment in his city. "Cities are the engines of wealth creation and it's in everyone's interests that they achieve their economic potential," he said.

Sir Richard Leese, leader of Manchester city council, said he hoped the appointment signalled a recognition of the role cities outside London had in driving prosperity and creating new jobs. "Certainly the indication that the government is looking to grant greater autonomy to the core cities is a welcome one. We believe there are many instances where a 'one size fits all' approach simply isn't appropriate and cities are much better placed to realise their own ambitions."

Sir Richard said he will meet with the new minister to discuss the work of the City Finance Commission, a joint group set up by Manchester, Birmingham and Westminster city councils, which had concluded that a new system of government finance offering self-sufficiency and greater control over funding pots, would better support Britain's urban hubs.

Joanna Averley, interim chief executive of the thinktank Centre for Cities, also welcomed the announcement. "Cities are the powerhouses of the UK economy and this appointment presents a real opportunity for government to step up engagement with the cities, businesses and local enterprise partnerships to drive economic growth," she said.

"Although the conversation may start with the eight core cities, it is important that ultimately discussions with all cities, with their unique histories, geography and opportunities, take place to inform policy making."